Health Care and Spaghetti Federalism

Worth A Look, Healthcare & Welfare, Frontier Centre

When the Prime Minister first proposed holding a televised health care summit it was, he told Canadians, to fix the system for a generation. And following the three-day marathon meeting, Canada’s first ministers struck a deal. Over the next six years, Ottawa will spend an additional $18-billion on health care. Provincial and territorial cash transfers will also increase by 6 per cent a year until 2015 – bringing the total cost, over 10 years, to more than $40-billion.

Will this injection of cash finally end the bickering between Ottawa and the premiers? Hardly, already some premiers, notably British Columbia’s Gordon Campbell and New Brunswick’s Bernard Lord, are saying the money will help,
but they cannot predict what they might need in a decade or even sooner. Rather than “buying change” this sounds more like buying time. No wonder Canadians are losing confidence in government-run health care.

There are two fundamental problems with Canada’s medicare system. The first is the lack of political accountability and transparency; and the second is knee-jerk opposition to allowing private health care to compete with, and complement, the public system. Because neither concern was addressed in Ottawa, the health care summit should be regarded a failure.

Provincial and territorial premiers came to town looking for more money, and they got it. Yet the first ministers did not discuss the health system’s “best practices” used in other OECD countries. They did not debate how private health care could ease pressure on the public system and help reduce waiting times. Nor did they address why, according to Statistics Canada,
1.2-million Canadians cannot find a family doctor.

Throwing more money at Canada’s health care monopoly will not fix anything. The 2000 Health Accord added $20-billion to health budgets and was not enough to save medicare. Why will this deal be any different? And when this latest infusion of cash fails to repair health care, who should Canadians hold accountable?

The answer is more elusive than ever. Is it the federal government’s responsibility to ensure patients receive timely care? No, this cannot be since it does not administer or deliver medicare – provinces and territories do. So it must be the premiers? Wrong again. If the provinces and territories were in charge they would not keep coming back to Ottawa, cap in hand. Taxpayers hoping to understand the health system are left spinning in a spaghetti maze.

The federal and provincial governments spend some $88-billion on health care. For this amount of money Canadians get a system that, by international standards, is middle of the road. To improve medicare and ensure tax dollars are spent wisely, federal-provincial responsibilities must be streamlined.

Ottawa’s contributes to provincial and territorial health budgets by writing them a cheque ($24-billion this year, money that is used for health, education, and welfare). Additional support comes from tax points the federal government allocated to the provinces in 1977, when Ottawa reduced its income tax rates to allow provincial and territorial government to raise their rates. This transfer did not change the amount of tax paid by Canadians, but it did permit provinces/territories to collect the tax revenues directly, eliminating Ottawa’s role as middleman. (Today, these tax points are worth $18-billion.)

To ensure efficient funding, Ottawa’s annual cash transfer should be replaced with another tax point transfer. Such a change would make the provinces/territories responsible for raising and spending money. That way if the system broke down Canadians would know who to call.

But how can Canadians know what works – and what does not – when the Canada Health Act confines provinces to the government monopoly health care box while preventing them from experimenting with different solutions? The benefits federalism affords to reforming health care are being squandered by our political leaders. Our provinces should become laboratories of social policy experimentation. Successful reforms tested in one jurisdiction could then be copied in others and changes that fail to win public support scrapped.

Voters want the health care system fixed. This will not happen following the latest deal, which represents more of the status quo. Until responsibility for funding and delivering medicare is streamlined, health will remain a political football. Political meetings in Ottawa might produce lots of drama. But is it anyway to run the health care system?

John Williamson is Federal Director of the Canadian Taxpayers Federation in Ottawa.